Thursday, September 13, 2018

Financial Wellness: Measuring Value

There’s no easy way to calculate a return on investment from financial wellness programs. Survey respondents are clearly struggling to measure program value. This is especially challenging, since measurement of value is imperative for initiatives that require employer investment.
When deciding whether financial wellness is worth offering and how the program should be designed, any recommended course of action will depend on a detailed assessment of the workforce’s needs. During that process, some organizations will see value in such programs, while others are hesitant to make that commitment. In either case, HR professionals will need to work closely with c-suite executives to plot a course for measurable results. While there’s no guarantee that financial wellness will have a positive impact on any organization’s bottom line, survey respondents seem to agree about the potential benefits associated with achieving full engagement from their employees.

Tuesday, August 21, 2018

Financial Wellness: One Size Doesn’t Fit All

Financial wellness programs may not be the right fit for some organizations. There may be a moral imperative that drives commitment for some, while others require a business imperative to justify the investment. Regardless of the rationale, a logical starting point would be for an organization to survey its employees and assess the need.

As employers learn more about financial wellness, some will deem these programs a good fit for their organizations, while others will not see the need to establish one or consider it a top priority. For those who see value in financial wellness programs, some may be drawn to them as a moral imperative, while others believe they’re a worthy business investment.

Friday, August 10, 2018

Q2 Market Recap: Signal-to-Noise Ratio

The signal-to-noise ratio is an electrical engineering term used to express the clarity of audio. Signal-to-noise has a financial application as well. Currently, investors need to separate the signal from the noise to understand why the stock market continues its bull run despite disturbing headlines on the domestic and global fronts. The Q2 Market Recap identifies the signals that are driving the market higher and therefore merit investors’ attention. We define a signal as information that is used by successful investors for valuing securities and making investment decisions (buy, sell, or hold). These signals are always relevant for investors making retirement savings decisions. We define noise as negative information that falsely appears relevant to investment decisions. Noise adds to market volatility, but ultimately fails to negatively impact the signals.

Read the Q2 Market Recap to learn more. If you have any questions, or would like to begin talking to a retirement plan advisor, please get in touch by calling (855) 882-9177 or e-mail us at sbs@hanys.org.

Tuesday, July 31, 2018

Financial Wellness: Understanding Financial Wellness Programs

The extent to which employers understand financial wellness begins to come into focus when assessing their responses to some basic questions. But with so many organizations struggling to understand what constitutes financial wellness, it’s clear that they need more information to assess the need for such a program.

Nearly 60% of the SBS survey respondents said their organization offers a financial wellness program, or plans to in 2018 or beyond. The remainder of those who were polled said their organization does not have such a program in place, nor do they plan to offer one. However, it’s worth noting that nearly 60% of respondents who do not have a financial wellness program believe their employees would be receptive to such a program.

Tuesday, July 10, 2018

Doing Good While Doing Well

Plan fiduciaries are seeing increased interest in social, or impact, investing as an option in their plan offerings. We have witnessed the evolution of socially responsible investing (SRI) from being just a consideration of avoiding companies that profit from “sin” (alcohol, tobacco, gambling, firearms, etc.) to a holistic focus on environmental, social, and governance (ESG) factors as integral to an investment strategy.

To be good stewards of capital, advanced knowledge of the benefits and significance of sustainability in investing―aligning with values―is essential. It is especially important to the millennial generation, and is consistent with the importance many institutions place on social responsibility as part of their greater mission.

Friday, June 29, 2018

Survey Report: “Assessing the Merits and Challenges of Financial Wellness"

In Assessing the Merits and Challenges of Financial Wellness, SBS evaluates whether financial wellness programs are a wise choice and welcome addition to the traditional employee benefits package.

Financial wellness is an increasingly popular topic, but there is no consensus about the value of financial wellness programs in the workplace. While clear advantages and perceived value have been identified, several obstacles remain.

SBS surveyed employers and three key themes emerged from the research:
  1. There is a general lack of understanding about what financial wellness programs deliver to both employers and employees. 
  2. Financial wellness programs may not be the right fit for some organizations. 
  3. There’s no easy way to calculate a return on investment from financial wellness programs. 
To read more about the three key themes that emerged from the financial wellness research, download Assessing the Merits and Challenges of Financial Wellness. To begin talking to a retirement plan advisor, please get in touch by email or by calling (855) 882-9177.

Tuesday, June 12, 2018

James Kelley, President, Strategic Benefit Services, Joins the Retirement Advisor Council

Strategic Benefit Services (SBS) is pleased to announce the appointment of James J. Kelley, President, to the Retirement Advisor Council, effective January 1, 2018.

The Retirement Advisor Council is a national organization that advocates for successful qualified plan and participant retirement outcomes through the collaborative efforts of experienced, qualified retirement plan advisors, investment managers, and defined contribution plan service providers. To advance its mission, the Council undertakes initiatives in the areas of research, public relations and promotion, public education, regulatory positions, and practice management. The Council accomplishes this mission by:
  • identifying duties, responsibilities, and attributes of the professional retirement plan advisor;
  • sharing professional standards with plan sponsors who are responsible for the success of their plans; 
  • providing collective thought capital to decision makers, product providers, legislators, and the public;
  • giving voice to the retirement plan advisor community; and
  • offering tools to evaluate advisors to ensure the quality of services provided.

Wednesday, June 6, 2018

Strategic Benefit Services Adds New Leadership to Retirement and Employee Benefits Portfolios

Strategic Benefit Services (SBS), an industry leader that has provided for more than 45 years trusted advisory services, retirement plan offerings, and best-in-class employee benefits products, recently hired new executives to expand its employee benefits portfolios.

“SBS is building our team with uniquely talented individuals who bring years of industry experience,” said James J. Kelley, SBS President. “SBS builds real relationships with our clients by investing in a team of professionals who use their expertise to bring successful outcomes.”

Avon M. Scherff joined SBS as the new Director of Employee Benefit Services. Laura A. Sausville joined SBS as a Sales Account Executive responsible for new business development of group employee benefits.

Tuesday, May 29, 2018

4 Key Benefits of a Strong Financial Wellness Program

Financial wellness is an increasingly popular topic, but there is no consensus about the value of financial wellness programs in the workplace. While clear advantages and perceived value have been identified, several obstacles remain.

In Assessing the Merits and Challenges of Financial Wellness, SBS evaluates whether financial wellness programs are a wise choice and welcome addition to the traditional employee benefits package.

To read more about the key themes that emerged from the financial wellness research, download Assessing the Merits and Challenges of Financial Wellness.

Why is Financial Wellness Important to Plan Sponsors?

When designed properly, financial wellness programs can help employers enhance their benefits packages and realize significant cost savings by helping employees retire on time, be more productive, and enjoy better health.

Wednesday, May 23, 2018

Can You Invest Your Way to Plan Termination?

Some interesting dynamics have been developing in the retirement industry with respect to defined benefit pension plans.  Most plan sponsors that have maintained these plan types have either suspended or frozen them.  This has been an effort to reduce/control their liabilities and funding obligations and to better respond to a younger workforce by replacing defined benefit plans with defined contribution plans.

For many sponsors, the strategy was to simply look to positive investment returns to “close the gap,” expecting that assets would grow faster than liabilities, creating a positive scenario that would reduce the cash contribution requirements and lead to eventual plan termination.  Unfortunately, this has not happened.

Just prior to the dramatic economic downturn in 2008, many plans enjoyed a funding ratio in excess of 100%.  Following the downturn, plans’ funding ratios dropped precipitously.   As we all know, the market then proceeded to experience an historic run through 2017.  The following chart of a survey conducted by Milliman of the Top 100 Defined Benefit Plans illustrates that funding ratios have remained stagnant since 2008, at 80% or below, even with the significant market upswing.

So what happened?  

All sponsors of frozen plans knew that liabilities would increase even though benefit accruals were fixed.  This would be due to simple aging of the participant population―generally, very manageable.  Combined with this historic investment performance over the past ten years, there was an expectation the funding deficits would return to pre-2008 levels.  What was not anticipated was the corresponding increase in “carrying costs” and an extremely low interest rate environment.

These carrying costs included:

  • Pension Benefit Guaranty Corporation (PBGC) premiums;
  • benefit payment expenses;
  • life expectancy changes reflected by stronger mortality tables;
  • increased regulatory complexities;
  • historically low interest rates; and
  • investment management fees.

The single biggest cost increase of those listed has been PBGC premiums.  Since 2012, the fixed premium has risen more than 130% while the variable premium has risen nearly 400%!    It is reasonable to expect more increases in the future as PBGC efficiency declines with the number of covered pension plans.


If the end goal is plan termination, none of these expense increases have helped.  Therefore, the changes we are beginning to see in defined benefit funding are not directed toward investment portfolios but rather toward the concept of pension risk transfer (PRT).  Rather than try to simply offset increasing costs and liabilities with improved investment performance, many sponsors have looked to removing liabilities and costs from the plan.

How is this done?  

Transfer the responsibility for the current and future payment of benefits to a third party, a.k.a. a reputable insurance company.  This not only reduces the sponsor’s liability but as importantly, eliminates PBGC premiums and benefit payment expenses.  Again, if the end goal is plan termination, this ultimately will be the way in which all plan obligations will be satisfied.

Not only could you de-risk current retirees, but terminated vested employees could also be included.  PRT is a multi-step process that takes a series of small steps of planned and coordinated actions over a period of time to minimize liabilities so that when the decision is made to formally terminate, the financial impact has been greatly reduced, if not eliminated, i.e., putting sponsors in a much stronger position to actually terminate with the least possible financial impact.

So at the end of the day, “Can You Invest Your Way to Plan Termination?”  Probably not.  This is not an absolute statement, but seems to be a clear trend based on the experience of the top 100 defined benefit plans in the U.S.  If you accept this as a reasonable position, then the answer lies in what can be done directly by plan sponsors to reach the end goal.  We think PRT is a very viable approach.

To learn more about strategies to help organizations reduce and ultimately eliminate the financial burden of defined benefit pension plans, or to begin talking to a retirement plan advisor, please get in touch by email or by calling (855) 882-9177.

Tuesday, May 15, 2018

Taxability of Disability Benefits

Many employers provide disability benefits to their employees as part of a comprehensive employee benefits package. Disability benefits replace a percentage of pre-disability income if an employee is unable to work due to illness or injury for a specified period of time. Employers may offer short-term disability coverage, long-term disability coverage, or integrate both short- and long-term disability coverage.

Group disability benefits can be structured in a number of ways. The taxability of these benefits generally depends on how the premiums for the coverage are paid. For example, if an employer and its employees split the cost of premiums for disability coverage, and the employees’ premiums are paid on a pre-tax basis through a cafeteria plan, the disability benefits are fully taxable to employees.

This Compliance Overview answers common questions regarding the taxability of disability benefits.

Monday, May 7, 2018

Q1 Market Recap: Taxes, Tariffs, and Tech

After nine consecutive quarters of gains, the S&P 500 lost 0.76% in the first quarter of 2018. The 0.76% loss masked a spike in volatility driven by the reduction in corporate tax rates in the Tax Cut and Jobs Act, stiff tariffs on imported steel and aluminum, and the prospect of new government regulation of technology firms.

Read the Q1 Retirement Market Recap to learn more about the 1st quarter market volatility. Also included are tips on managing defined benefit plans in the feature on "Can You Invest Your Way to Plan Termination?"

If you have any questions, or would like to begin talking to a retirement plan advisor, please get in touch by calling (855) 882-9177 or e-mail us at sbs@hanys.org.

Monday, April 30, 2018

The hidden cost of identity theft to employees and employers

Strategic Benefit Services is pleased to partner with CyberScout, a leading identity management and data theft services company. CyberScout delivers valuable prevention education, proactive protection services, and swift and appropriate incident remediation for more than 17.5 million households and more than 770,000 businesses.

The hidden cost of identity theft to employees and employers:

When identity thieves take advantage of employees’ stolen personal information to obtain credit or loans, or to commit various types of fraud, both employees and employers pay a steep price. For example, victims:
  • need 165 hours, on average, to resolve identity theft; 
  • are absent five times more than average; and
  • use twice as much sick time.

Monday, April 2, 2018

The Financial Burden of Defined Benefit Plans

Defined benefit plans were the predominant retirement plan at the time the Employee Retirement Income Security Act (ERISA) was introduced in 1974. Many hospitals and other healthcare provider organizations in New York State had defined benefit pension plans. In a defined benefit plan, the total financial obligation falls strictly on the sponsor. The amount of benefit is stipulated and the funding of that benefit is the responsibility of the sponsor. As time went on, defined benefit plans became more onerous to maintain, more difficult to sponsor, and more expensive.

The Revenue Act of 1978 included a provision under which employees were not taxed on the portion of income they elect to receive as deferred compensation rather than as direct cash payments, thus making 401(k) plans possible. The emergence of defined contribution plans began a transition away from the plan sponsor offering and managing the retirement benefits, to participants having the ability to directly manage their retirement savings.

Thursday, February 8, 2018

Changing Times: Impact of the shift in types of retirement plans

The days are gone when a typical employee works for the same employer for 30 or 40 years and then collects a check every month for the rest of his or her life. Although the majority of employees had little understanding of how a defined benefit plan worked, they knew exactly how much they would get each month at retirement. Together with what they would earn from Social Security, it was relatively easy to plan for the future.

Thursday, February 1, 2018

2018 Retirement Services Compliance Calendar and Notices Reminder

Strategic Benefit Services wants to help you stay compliant with the 2018 Retirement Services Compliance Calendar and Notices Reminder.

Compliance is just one of many services we provide. Strategic Benefit Services created this document to remind plan administrators of the compliance deadlines and notices required for distribution.

If you have any questions regarding compliance requirements or their application to your plan, contact us at (855) 882-9177or at sbs@ hanys.org.

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